The cryptocurrency craze is evident everywhere in Turkey, and the area around the Grand Bazaar is home to several small businesses where you can simply walk in and exchange your cash for BTC or USDT.
The Turkish lira has seen record inflation levels over the past few years, making wealth accumulation nearly impossible. Even before cryptocurrencies began to take off in Turkey, most retail institutions accepted alternative paper currencies such as the euro and the dollar.
According to a research report by Paribu, one of Turkey's largest cryptocurrency exchanges, it is estimated that at least 8 million people in Turkey are engaged in the cryptocurrency industry. Just recently, Turkish President Erdogan emphasized the benefits of blockchain technology while advising young people to stay away from cryptocurrency gambling. He also said that Turkey hopes to become a producer in the world of digital assets, not a consumer.
Türkiye’s cryptocurrency policy
In Turkish law, cryptocurrencies were initially governed by the Regulation on the Prohibition of Payment Using Crypto Assets, which was published in the Official Gazette on April 16, 2021. The government banned the use of cryptocurrencies to pay for goods and services, but still allowed cryptocurrency trading.
Currently, Turkey's Central Bank Regulation is the first and only regulation that defines and directly regulates cryptocurrencies. The Central Bank Regulation refers to cryptocurrencies as "crypto assets" and defines crypto assets as "intangible assets that are virtually created using distributed ledgers or similar technologies and distributed through digital networks and do not qualify as currency, registered currency, or electronic money." There are several factors behind the central bank's regulation:
(1) Due to the lack of supervision and oversight mechanisms for crypto assets, the use of crypto assets for payment may cause irreparable losses to both parties to the transaction, as well as the probability of excessive fluctuations;
(2) There is no mechanism to provide security for the wallet;
(3) Due to its anonymous structure, it may be used for illegal activities.
Although the purpose of the Central Bank Regulation is mainly to determine the procedures and principles for prohibiting the use of crypto-assets in payments, the Central Bank Regulation can still be considered groundbreaking because it defines "crypto-assets" for the first time.
Turkey is planning to develop rules for the crypto industry that will ensure consumer protection but also support innovation, the deputy chairman of the ruling party said in a recent interview with CoinDesk.
“Our goal is to protect citizens, protect investors, regulate platforms, but also come up with a draft law that will pave the way for innovators and innovation.”
The spokesman said Turkey has big plans in various technology fields such as blockchain and artificial intelligence. He pointed to initiatives such as Istanbul Blockchain Week and the government-sponsored Metaverse Forum as examples of the government’s interest in the blockchain sector.
Meanwhile, in order to prevent the risk of money laundering and financing of terrorism through crypto assets, Turkey's Presidential Decree No. 3941 was published in the Official Gazette on May 1, 2021, numbered 31471, and amended Article 4 of the Crypto Assets Regulation to define the term "obligated party". This amendment expanded the scope of application of the Measures to ensure that the obligations set forth therein also apply to CASPs. Therefore, CASPs are considered "obligated parties" under the Measures and shall be responsible for preventing the laundering of proceeds of crime and the financing of terrorism.
How the Turkish Government is Dealing with Crypto Regulation
According to an article titled “2024 Cryptocurrency Spring Report,” data showed that Turkey’s stablecoin purchases accounted for 4.3% of its GDP between April 2023 and March 2024, making it the world’s largest stablecoin spender relative to GDP.
There have been various mainstream media articles describing cryptocurrencies as a refuge from Turkey’s high inflation and the sharp depreciation of the lira. But in Turkey, cryptocurrencies represent a different kind of freedom: freedom from the constraints of the national currency, government economic policies, and even corporate life.
A cryptocurrency exchange in Istanbul, Turkey
However, in the pursuit of cryptocurrency freedom, some problems have also emerged. The most criticized is that some local cryptocurrency trading platforms are suspected of misappropriating funds, running away and other illegal activities, causing huge losses to investors.
For example, Thodex was once one of the largest cryptocurrency exchanges in Turkey, before it suddenly went offline in April 2021 and its founder Özer disappeared. More than 400,000 members were left in the dark and unable to access $2 billion worth of cryptocurrency deposits. Özer later fled to Albania and was arrested in August 2022 after an Interpol red notice.
By April 2023, Özer was extradited to Turkey and detained by police upon arrival on seven charges, including the creation and management of an organization with criminal purposes, membership in an organization, the use of information systems as a tool for fraud. Fraud of banks or credit institutions, businessmen or company executives and cooperation managers, and the laundering of the value of assets obtained through criminal activity.
This has made all sectors of society realize that simply pursuing cryptocurrency freedom is not enough, and a corresponding regulatory framework must be established. Only in a compliant and transparent environment can the cryptocurrency industry be truly trusted and adopted by the public.
Therefore, in Turkey's cryptocurrency regulation path, the government and the industry need to cooperate with each other to seek a balance between safeguarding investor rights, preventing financial risks, and protecting innovative development. Only under the premise of adhering to compliant operations can cryptocurrency truly become a powerful tool for promoting economic freedom and hedging value-added.
Based in Türkiye, Beosin empowers Türkiye's Web3 security + supervision
From May 17 to 18, blockchain security company Beosin will be invited to participate in the "Eurasia Web3 Festival" held in Cappadocia, Turkey. The summit brings together the best of the blockchain industry, experts, scholars, entrepreneurs, and regulators from all over the world to discuss the latest developments and trends in blockchain technology.
As an important part of this summit, Professor Monica Yang, founder of Beosin, will deliver a keynote speech entitled "Security + Regulation". She will combine her many years of experience in blockchain security research to focus on the relationship between blockchain security and regulatory compliance.
We also welcome new and old friends to meet us in Türkiye.
As one of the earliest blockchain security companies in the world engaged in formal verification, Beosin focuses on the "security + compliance" full ecosystem business. We will promote the development of Web3 security and supervision in Turkey. Whether it is code security audits before the project goes online, security risk monitoring and blocking during project operation, stolen recovery, or virtual asset anti-money laundering (AML) and compliance assessments that meet local regulatory requirements, we will continue to play a key role in these regions to promote the development of Web3 security and supervision.
